Del HC Stays Its Previous Order Allowing Natco to Export Bayer’s Nexavar Under the Bolar Exemption

We are pleased to bring to you this guest post by our intern, Radhika Agarwal. Radhika is currently working as a Research Fellow at the Centre for WTO Studies at the Indian Institute of Foreign Trade.

Del HC Stays Its Previous Order Allowing Natco to Export Bayer’s Nexavar Under the Bolar Exemption

Radhika Agarwal

Recently, SpicyIP reported a landmark order of the Delhi High Court (dated March 8, 2017), where it had ruled that ‘export’ of a patented invention for experimental purposes falls within the ambit of “Bolar exemption” (provided under Section 107A of the Indian Patents Act, 1970), and that such ‘export’ therefore does not amount to patent infringement.

Accordingly, the court held that Natco Pharma Limited had a right to export Bayer’s patented drug ‘Sorafenib Tosylate’ (for which it was granted a compulsory licence in 2012) to China for the purposes specified in Section 107A of the Act, namely, conducting development/ clinical studies and trials. It also held that the manufacture and export of another Bayer’s patented drug Rivoroxaban to the European Union by the Indian pharmaceutical company, Alembic Pharmaceuticals Limited was covered under Section 107A of the Act as well. It therefore dismissed the suit filed by Bayer against Natco and Alembic.

However, the order was reportedly modified yesterday (May 12, 2017) by a Division Bench of the Delhi High Court comprising Acting Chief Justice Gita Mittal and Justice Anu Malhotra. It is interesting to note that the stay of the order is purportedly only against Natco and not Alembic. According to the court, there is a considerable difference between exporting a drug for the purpose of seeking licence approval (as had been claimed by Natco) and that for commercial purpose.

The court also observed that according to the terms of the compulsory licence issued to Natco, export for commercial purpose had been prohibited. It further observed that in order to export a drug for licence approval or experimental purpose, Natco was required to file a separate application, and that the court would permit only a limited quantity of the drug to be exported. Accordingly, it directed Natco not to export the generic version of Bayer’s drug ‘Sorafenib Tosylate’ (which was marketed as ‘Nexavar’) till September 21, 2017. We’re not sure at this stage as to whether or not the quantities exported by Natco now are in excess of what a regulatory submission might require. Or whether any exports qualify as “commercial” exports. We have to wait to see the order to confirm this.

The court additionally issued notices to Natco, the Centre and the Drug Controller General of India (DCGI), asking them to reply to Bayer’s plea against the previous order of the Delhi High Court (pronounced in March). The court was also reported to have made the statement “What you cannot do directly, you cannot do indirectly”, implying that Natco was not permitted to use the earlier (March) order in its favour to enter into negotiations with third parties to sell the drug outside India. However, this can be confirmed only after we get a copy of the order, which is not yet publicly available.

The earlier single bench order had been challenged by Bayer which alleges that Natco was exporting the finished product and not the active pharmaceutical ingredient (API) or salt form. Natco however denied the allegation, stating that it was selling the drug only in India, and exporting the API and the finished product for experimental purpose to countries such as China. Natco also stated that licence approval is granted in these countries only after a period of 2 to 5 years, subsequent to an application for such approval. Natco further stated that it would export for commercial purpose only after the expiry of Bayer’s patent term in 2020. More later when we have the order with us.

Thanks to Mr. Sandeep K. Rathod for bringing this decision to our attention.

Dear Mr. Modi, I only passed the information based on the newspaper links that reported the hearing immediately. For your information, the order is now available on Delhi HC website.
Hope this satisfies your curiosity.

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